As a result of economic momentum which has to be fed by throwing reality, environmental care, social consequences into the fire of wealth creation it is essential that we review relative values and how we deal with them.
When we start to look at relative values, firstly there are reality and social values and it is not possible to say that one is more value than the other because they are measured differently, i.e. one attracts majorly a material value in the form of price, the other attracts an emotional value not measured in terms of wealth. I suspect for most people emotionally based values are more important than monetary values. However, just as it is possible to put a monetary value on social value it is also possible to have social values affecting reality. Consequently there is interdependence of a sort.
The other important area in relative value is the determination of applying a price or standard of worth against reality and social values, And this is where we have great difficulty as prices and values have evolved over the years, creating questionable values.
For instance, look at the relative value between bread and gold. On the one hand, bread is a "staple" for man and forms the basis of diet for many people. It provides fibre and nutrition - bread is cheap, replaceable, available in vast quantities, contributes to the domino effect.
On the other hand gold is a "precious" metal, has a high monetary value, is irreplaceable, its availability is limited. On the one hand we have a commodity in bread that attracts a low unit monetary value and at the other end of the scale is gold, attracting a high unit value, so in terms of wealth, gold is worth far more than bread.
Yet if the earth consisted of no bread and a lot of gold, man would be much poorer; on the other hand if the earth consisted of no gold and a lot of bread, man would not care (because he would not be in a position to miss it) so we have to come to some conclusions about the distortion of relative values that has accompanied man through the ages because if price is a reflection of value to men, surely in the above model the relative values of bread and gold should be different, i.e. monetary worth should be a reflection of real worth rather than a distortion of it; i.e. monetary value and worth can let man down and distort his relationship with the true elements of reality.
Of course the reason why bread is cheap is because it is cheap to produce, is consumed daily, so there is steady repeat business, but does that not mean that gold should be cheaper still or at least the value relationship between gold and bread should not be so great, i.e. should it be that bread should be dearer or gold should be cheaper?
This work has been at pains to accept that a system of wealth creation is important but that it should contain realistic notions of value, and that prices should reflect them. So for sake of argument, if we return to the above model and suggest that because bread is worth more, overnight it should increase its price by 50%. What would the effect be? (1) because it has risen dramatically in price, do fewer people buy bread? or people buy less bread, thereby frustrating the market? or (2) because bread is a staple, do people buy the same amount of bread?
On the one hand wealth is likely to decrease; on the other, greatly increase. I suspect it would tend towards the latter; because bread is a staple the extra money generated by baking would be offset by either a drop in savings or a shift away from the purchase of luxury goods. The important thing is if it were achieved overnight, suddenly the baking business would be achieving extra revenue which could find its way into reality and social benefits for the community; it may increase employment, etc., etc.
What I am at pains to show here is that in general, prices which are a declaration of relative value have kind of evolved-over the years and are not necessarily a guide to relative worth; consequently what is needed is a pricing assessment by economists that looks at how prices are reached. If given a specific target of reality and social needs in the country it should be possible to get a picture of what moneys are needed in the form of tax to effect social justice and this to reflect through to an idea of what sort of turnover there needs to be as a percentage of this tax becomes an adjustment to VAT and on which goods are taxed. Furthermore it should be possible to have a social and environmental programme that studies industries and their relative use of energy and threat to the environment and creates a situation whereby prices of a particular product are geared to a specific volume of sales that keep the company in business but does not threaten the environment, and at the same time provides, healthy profit.
I know the above couple of points look difficult to achieve and assess but have we any choice? In Part One of the book it was suggested that man has to contain his activities within what the earth will stand and if this means wholesale economic review, then we have no choice.
We are all aware of the poverty in the Third World and it has an effect upon us. We feel that we have a sense of responsibility towards the ongoing development of poor countries, particularly in Asia and Africa.
However in this case we need to look back at domino effect where force becomes momentum and momentum sustains energetic effort without price being particularly an important factor. I would draw your attention to the point that the development of the Third World issue has never been a pressure on price, consequently as the demand for more wealth diversion has occurred it has become a strain on western nations' budgets to support Third World development.
In effect the relative increase in the social cost of the world has not been met with a specific increase in the cost of living in the West to pay for it. As a result there is a distortion between the relative shift in social responsibility and its cost over the years compared with an engineered shift in percentage mark-ups in the West to cover it.
However, all this only serves to suggest that we do not know enough about how to evolve a basis for pricing that aims at maintaining prosperous lifestyle by specifically adjusting prices upward and downward to effect a shift in the importance of liberal mark-ups on prices to allow profit development that enables a more caring and environmentally conscious society
